Summary

Overall, we generally agree with Psacharopoulos on the value of improving school quality, and we share his skepticism of vocational and technical education. Yet we would also argue that the evidence for expanding preprimary and primary education in sub-Saharan Africa is not as strong as he claims.

The task set is a very difficult one, and we question the very idea of this undertaking, largely because the field of education suffers particularly from output-driven goals rather than outcomes. Setting goals that focus on outputs or proxies, such as enrollment rates, creates an incentive to attain that specific goal, which will not necessarily lead to the essential goals or benefits of education, such as human capital, knowledge, and skills.

It is this “how to proceed” that is crucially absent from Psacharopoulos's chapter. For instance, improving school quality by increasing student test scores is stated to have a benefit-cost ratio between 3.0 and 5.0, but how to improve test scores and school quality is effectively not discussed. Even if ways to achieve more years of schooling can be found and costed, calculating the benefit-cost ratio can be misleading given the lack of data on externalities, measurement errors (particularly in developing countries), the absence of the selfemployed from the estimate, and the inclusion of government workers, whose salary reflects government policy rather than productivity.

We are therefore concerned about the likely inaccuracy of the quoted figures. This is compounded by the low quality of the evidence presented (and perhaps the quality of evidence available). A further factor is the uncertainty around estimates and potential outliers. In particular, the benefit-cost ratio of preschool programs in sub-Saharan Africa is based on a study in Kenya, with a ratio an order of magnitude higher than others, with no adequate justification.

A weakness of the chapter is that it provides no economic justification for public subsidy of education because social rates of return quoted are lower than private rates of return. Although Psacharopoulos alludes to wider social benefits, he is not able to provide sufficient hard evidence to support his case.

Research from developed countries shows that the best investment a country can make is likely to be in preprimary education, particularly for disadvantaged children. This is the most cost-effective stage to invest in, and the opportunity cost of children's time is low at this age.